Passion for energy

Transmission Rights Forward Market Liquidity

Nordreg meeting

20. april 2015

Thor Kalstrup

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Passion for energy

Danske Commodities

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UIOSI

• Danske Commodities is a trading company.• Trading in the Nordic market since 2004.• DC is active in the Danish, Swedish and Finish bidding areas.

Passion for energy

Our view of the financial markets

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• Nordic power market can be divided into two groups.

High correlation• All hydro dominated price areas: Norway, ”SE1” and ”SE2”.• Well covered by the System Price.• Well functional market with high liquidity.• Fairly liquid week and dayahead.

Low correlation• DK1, DK2, SE4, Finland, ”SE3”.• System price is not a sufficient market for hedging.• Dependend on the EPAD market.• Low liquidity in the EPAD market.• No week og dayahead EPAD market.

Passion for energy

Transmission rights

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• Transmission rights would be a great addition to the low correlatedbidding areas. • More oppertunities for forward hedging.• Hedge open delivery positions.• Liquidity? Worst case nothing happens, best cast liquidity goes up.• Adding products increase market attractivness.

Passion for energy

Transmission rights

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Capacity between two uncorrelated areas• Transmission right is a better instrument to hedge local spikes.• DK2-Malmø and DK1-DK2.

Liquidity effects by introducing LTTR.• All things being equal liquidity goes up.• The market will be more attractive.• Potential new players will bring new interest to the market.• Worst case nothing happens.

Passion for energy

Market place and financial markets

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Market place• One platform for bidding for the capacity.• Uniform rules for the different capacities.• Auctions should be done during trading hours.

Development of financial market• Regulators makes sure barriers to entry are low and rules and regulations are at a minimum.• Exchanges should supply the necessary platforms and products for hedging.• Nordpoolspot offer a transparent and reliable spot price.

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Development

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• TSO involvment should be offering capacity to the market.• Boost daily/weekly market with STTR (daily and/or weekly capacity).• Stakeholders and regulators should be open to new initiatives.that help market liquidity.

Passion for energy

Thank you

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